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Reconsidering The Pros and Cons of Fiscal Policy Coordination in a Monetary Union: Should We Set Public Expenditure Targets?

Author

Listed:
  • Marco Catenaro

    (University of Milan-Bicocca and University of Surrey (UniS))

  • Patrizio Tirelli

    (Department of Economics, University of Milan-Bicocca and University of Glasgow)

Abstract

We reconsider the issues of fiscal policy interdependence in a monetary union, challenging the view that non co-ordination is always preferable. Moreover, we show that an expenditure bias occurs irrespective of the fiscal regime in place. We argue that a contractualist approach à la Walsh should be extended to the conduct of fiscal policy, setting explicit public expenditure targets.

Suggested Citation

  • Marco Catenaro & Patrizio Tirelli, 1999. "Reconsidering The Pros and Cons of Fiscal Policy Coordination in a Monetary Union: Should We Set Public Expenditure Targets?," Working Papers 30, University of Milano-Bicocca, Department of Economics, revised Sep 2000.
    • Handle: RePEc:mib:wpaper:30
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    Cited by:

    1. repec:spo:wpmain:info:hdl:2441/1482 is not listed on IDEAS
    2. Francesca Castellani & Xavier Debrun, 2005. "Designing Macroeconomic Frameworks: A Positive Analysis of Monetary and Fiscal Delegation," International Finance, Wiley Blackwell, vol. 8(1), pages 87-117, March.
    3. Jean-Paul Fitoussi & Francesco Saraceno, 2002. "A Theory of Social Custom of Which Soft Growth May Be One Consequence. Tales of the European Stability Pact," SciencePo Working papers Main hal-01065024, HAL.
    4. Ms. Francesca Castellani & Mr. Xavier Debrun, 2001. "Central Bank Independence and the Design of Fiscal Institutions," IMF Working Papers 2001/205, International Monetary Fund.
    5. repec:spo:wpecon:info:hdl:2441/1482 is not listed on IDEAS
    6. Kilian Bizer & Zulia Gubaydullina & Hazim Rahahleh & Werner Sesselmeier, 2007. "FTPL-Perspective on Tradable Deficit Permits in the EMU," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 35(3), pages 259-267, September.
    7. Mr. Roel M. W. J. Beetsma & Mr. Xavier Debrun & Mr. Franc Klaassen, 2001. "Is Fiscal Policy Coordination in EMU Desirable?," IMF Working Papers 2001/178, International Monetary Fund.
    8. repec:spo:wpecon:info:hdl:2441/1422 is not listed on IDEAS
    9. repec:hal:spmain:info:hdl:2441/9909 is not listed on IDEAS
    10. Francesca Castellani, 2001. "Central Bank Independence and Accountability Under Complete Information," IHEID Working Papers 05-2001, Economics Section, The Graduate Institute of International Studies.
    11. Jean‐Paul Fitoussi & Francesco Saraceno, 2008. "Fiscal Discipline as a Social Norm: The European Stability Pact," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(6), pages 1143-1168, December.
    12. repec:hal:wpspec:info:hdl:2441/9909 is not listed on IDEAS
    13. repec:ebl:ecbull:v:5:y:2008:i:34:p:1-12 is not listed on IDEAS
    14. Cornel Oros, 2008. "Macroeconomic stabilization in a heterogeneous monetary union: some insights into the effects of fiscal policy coordination," Economics Bulletin, AccessEcon, vol. 5(34), pages 1-12.
    15. Julia del Amo Valor & Marcos Martín Mateos & Diego Martínez López & Javier J. Pérez, 2023. "Is the European economic governance framework too “complex”? A critical discussion," Working Papers 2023-06, FEDEA.
    16. repec:spo:wpmain:info:hdl:2441/9909 is not listed on IDEAS
    17. Lossani, Marco & Natale, Piergiovanna & Tirelli, Patrizio, 2001. "A Reform Proposal for EMU Institutions," MPRA Paper 18694, University Library of Munich, Germany.
    18. repec:spo:wpmain:info:hdl:2441/1422 is not listed on IDEAS
    19. repec:hal:wpspec:info:hdl:2441/1422 is not listed on IDEAS
    20. repec:hal:spmain:info:hdl:2441/1422 is not listed on IDEAS
    21. repec:spo:wpecon:info:hdl:2441/9909 is not listed on IDEAS
    22. repec:hal:spmain:info:hdl:2441/1482 is not listed on IDEAS
    23. repec:hal:wpspec:info:hdl:2441/1482 is not listed on IDEAS

    More about this item

    Keywords

    EMU; Fiscal Leadership; ECB; Fiscal Co-ordination; Inflation Targets;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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